Answer and Explanation:
The computation is shown below:
As we know that
1) Closing inventory = Beginning Inventory + Units produced - units sold
= 43,000 + 128,000 - 121,000
= 50,000 units
Now Cost per unit = Direct material per unit + direct labor per unit + Variable manufacturing overhead + fixed Manufacturing overhead
= $12.40 + $9.70 + $5.10 + $4.10
= $31.30
So, Ending finished-goods inventory under absorption costing is
= Closing Inventory × Cost per unit
= 50,000 units × $31.30
= $1,565,000
2)
Closing Inventory is
= 43,000 + 128,000 - 121,000
= 50,000 units
Cost per unit = Direct material per unit + direct labor per unit + Variable manufacturing overhead
= $12.40 + $9.70 + $5.10
= $27.20
So, Ending finished-goods inventory under Variable costing is
= Closing Inventory × Cost per unit
= 50,000 units × $27.20
= $1,360,000
3) Now the difference is
As we know that
Increase in inventory in units is
= Production - sales
= 128,000 - 121,000
= 7,000 units
And, the Fixed manufacturing overhead = $4.10
So, the Difference in reported income is
= Increase in inventory in units × Fixed manufacturing overhead
= 7,000 units × $4.10
= $28,700
